Credit Bureaus

Credit and credit bureaus go hand in hand. Understanding what a credit bureau is and does is a major part of understanding your credit.

The credit reporting bureaus are also known as credit reporting agencies. A credit reporting agency’s job is to act as a repository for credit and collection records, along with payment history and legal information. Whenever you apply for credit, the lender can buy from the credit report agencies a copy of this information. There are 3 major credit bureaus: Equifax, Experian credit bureau, and TransUnion credit bureau.

The 3 credit report agencies have been around for a while. The first credit bureaus were formed in the mid-1800s to provide merchants with a way to follow up on local citizens. They became even more popular after World War I, when the troops returning home from the war needed money to buy homes, cars, and more. The use of credit bureaus was even further expanded as credit cards gradually replaced the use of cash for higher priced items.

Today’s credit bureaus have their hands full, monitoring over 1 billion records and entering nearly 2 billion transactions each month. Because of the potential for error, the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act of 2003 were started. These two acts outline the requirements of the bureaus to maintain accurate records, allow for people to contact the credit bureau and view records, and respond to complaints of inaccuracies.

The internet opened up even more work for credit bureaus, since lenders could make credit decisions instantly online. You can now apply for credit online simply by filling out an application including your name, address, social security number, and date of birth. A 3 bureau online credit report is then researched, and if your score is above the minimum, the loan is approved instantly.

Also under law, you are able to obtain one free credit bureau report each year. You can choose to do this from just the Trans Union credit bureau or get a full 3 bureau credit report. It is highly recommended that all credit customers take advantage of this to check for errors on their report. This can alert you to things like identity theft, as well as keep your credit score accurate.

If you find an error on your credit report, it is important to contact the credit bureaus immediately. That way you can work at getting any inaccuracies corrected before they start to have a negative effect on your credit.